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Corporate and M&A

Amendments to the Family Business Act Come Into Force

By Mark Soler31st January 2019No Comments

Act XLVIII of 2016, entitled the Family Business

Act (the “Act”), [1] creates a legal framework for the registration of family businesses “established in Malta”. [2]  The system of registration contained in the Act allows Maltese authorities to supervise the grant offinancial “benefits” [3]  to those businesses that meet any of the criteria set out in Article 3 of the Act, and which have been duly registered with “the Regulator”.[4] Indeed, Article 7 of the Act provides that a business shall be a registered family business once it has been accepted for registration by the Regulator in terms of Article 28 of the Act.

As a result, prior registration is necessary for a family business to qualify for any of the benefits conferred by the Duty on Documents and Transfers Act, the Malta Enterprise Act and the Business Promotion Act.

Act XXXVII of 2018, entitled The Family Business (Amendment) Act (the “Amending Act”), envisages a few changes to the Act, which are summarized as follows:

  • Article 11 (4) has been amended to clarify that “any other law” under which a family business may apply for any benefit, means “any other law referring to family businesses”;
  • Article 11 (6) has been added to clarify that a business shall only be eligible to benefit from any incentive, benefit or scheme available to family businesses if its duly registered as a family business.
  • Article 11 (7) has been added to obligate the relevant institutions to consult the Register prior to granting any benefit;
  • The Annual Return period has been changed and shall now cover the calendar year starting from the first day of registration up until one year from the registration date.
  • The Regulator has been endowed with separate and
    distinct personality by virtue of Article 17A, but he shall not have the power
    to borrow or lend monies without the concurrent authorization in writing of the
    Minister responsible for the economy and the Minister responsible for finance.
    Moreover, the Regulator may not enter into any form of commercial partnership
    in furtherance of its functions or otherwise, unless authorized to do so in
    writing by the Minister responsible for the economy; 
  • The “Family Business Label” has now been substituted for a “Family Business Number”;
  • The Application Form previously found in the First Schedule has been deleted;
  • A standard-form Annual Return will now be found in the First Schedule, with a consequent deletion of the Second Schedule;

By virtue of Legal Notice 17 of 2019 all amendments shall apply from the 31st January 2019.

[1] Cap. 565 of the Laws of Malta
[2] The term “established in Malta” means the head office, agency, or branch or part of a business and shall include a permanent presence of that business carried out in Malta” – Article 2 of the Act
[3] The term “benefits” means any assistance or relief granted to a registered family business in terms of the Duty on Documents and Transfers Act, Malta Enterprise Act, Business Promotion Act and in terms of any other law or scheme as the Minister may prescribe by regulations;
[4] The term “Regulator” means a person who is appointed to manage, supervise and administer the Register of Family Businesses according to this Act and appointed by virtue of article 17 – Article 2 of the Act

Disclaimer
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Mark Soler or Dr. Maria Mulvaney.